Rare Medium announces management shakeup, shares rise

January 2, 20024:43 PM PST

Rare Medium jumped more than 30 percent after the company said two senior company executives will assume the duties of the outgoing chief financial officer. The company also reported earnings for its fourth quarter and said it doesn't expect to meet 2001 estimates.

The Internet incubator and provider of online services gained 75 cents to $3.06 in early trading Thursday. The stock has tumbled from its 52-week high of $94.75, but is up from its year low of $1.31.

Jeffrey Kaplan is leaving the CFO position to pursue other business opportunities, the company said. Craig Chesser, vice president of finance and treasurer, and Michael Hultberg, vice president and controller, will assume the responsibilities of CFO, in addition to continuing on with their existing duties. Chesser and Hultberg will report directly to Rare Medium's chairman and CEO, Glenn S. Meyers.

The CFO change comes on the heels of a profit warning. Rare Medium (Nasdaq: RRRR) on Wednesday said it is no longer comfortable with analysts' estimates for the year.

Analyst consensus was predicting a profit of 10 cents per share on revenue of $187 million, according to earnings tracking firm First Call.

"While we have not been immune to the softening demand presently characterizing our industry, we are pleased with our performance relative to our industry peers," Meyers said. "Our goal is to continue to run our Services business profitably."

A new forecast for 2001 will come later, the company said.

Rare Medium also reported quarterly earnings.

The company's Internet services business generated a cash profit of $3.5 million, or 6 cents a share, during the fourth quarter, ended Dec. 31. The Internet services unit reported $3.2 million, or 4 cents a share, cash earnings in the third quarter.

The Internet services business reported fourth-quarter revenue of $33.7 million, representing a 98 percent increase over the fourth quarter of 1999 and virtually flat with the previous quarter of 2000.

For the full year, Internet business services generated earnings of 10 cents per share, before taxes, depreciation and amortization.

Consolidated revenue for the fourth quarter was $29.2 million, a 66 percent increase over the $17.6 million taken in last year. Full-year consolidated revenue was $110.1 million, up from $36.7 million reported in 1999.

Including one-time charges and amortization, Rare Medium lost 73 cents per share in the fourth quarter.

Cash and short-term cash investments at the end of the quarter totaled $157.5 million.